Coal India Seeks Initial Bids for Overseas Mine Acquisitions

Feb. 27 (Bloomberg) -- Coal India Ltd., the world’s biggest
producer of the fuel, sought bids for overseas mine purchases to
counter a shortage of local supplies to power producers.

Investment banks, mine owners willing to sell stakes or
their representatives should place initial offers, Coal India
said today in an advertisement in the Mint newspaper, without
giving price or timing details. The Kolkata-based company is
examining seven stake sale proposals from Indonesia and
Australia, two people familiar with the matter said on Feb. 10.

Coal India, which fires more than half of India’s power
generation capacity, faces government pressure to ensure
uninterrupted supplies to utilities and cut blackouts that may
reduce economic growth to the slowest in a decade. The company’s
bid to raise output at home has been stymied by delays in land
purchases, slow environment approvals and frequent labor unrest.

“Considering the challenges Coal India faces in India,
it’s logical to seek supplies overseas,” said Rahul Jain, an
analyst with CIMB Securities India Pvt. in Mumbai. “The company
has a lot of cash and it may be a good way to use that money.”

Coal India shares rose as much as 1.3 percent to 318.65
rupees, the most in two weeks. The stock has declined 3.9
percent in the past year, compared with a 6.1 percent gain in
the benchmark Sensitive Index.

The company has started exploration at two mining areas in
Mozambique’s Tete province and has sought bids for additional
drilling in the area, according to a document on the company’s
website. The company plans to award the contract by March, the
two people said.

India’s annual thermal coal demand is expected to climb 43
percent to 730 million tons by 2017, while supplies from local
mines may increase 38 percent to 565 million tons, the Planning
Commission’s energy adviser I.A. Khan said on Feb. 18.